August

Since its announcement in Budget 2013, government has faced pressure from media claims that Help to Buy risks creating another housing bubble. So far it seems that media attention has focused on the negative risk aspect of rising prices. But normally, when economists talk about risk, they talk about risks balancing.

The media have spent a lot time in the last few weeks talking about UK house prices. I understand why. It’s high profile, especially given the undersupply of housing in key areas and the number of boosts to the housing market that government has given in the last couple of years (FirstBuy, Get Britain Building, Build Now Pay Later, NewBuy, Funding for Lending, Build to Rent, etc.).

If there is one thing that people don’t like, it is finding out that something they thought happened, didn’t actually happen. So, you can imagine the look on my face when the Office for National Statistics published their latest construction output data (for June & Q2) and suddenly the pre-recession peak of construction output had changed from 2008 Q1 to 2004 Q1. Luckily you don’t need to imagine as an artist named Edvard has captured it nicely.

Yesterday the Bank of England announced a change in strategy, the first move under the new Governor Mark Carney. Alongside the quarterly inflation report, the Bank of England announced that it would be issuing explicit guidance about the future path of monetary policy, namely, that policy would remain loose until the economy returned to strength.

I was showing my 3 year old godson an atlas of the world at the weekend and pointing out where London is. He looked curious but patently had no clue what I was talking about. It was all far too abstract. There was nothing he recognised. Where was the red postbox just outside his house and the newsagent at the end of the street, and where was his school?